Wexford Plans 53-Story Tower in West Texas Oil Boomtown

By David Mildenberg -
Apr 5, 2013

(Corrects names of Wexford partners in eighth paragraph of
story published April 4.)

Wexford Capital LP, a hedge fund
with $5 billion in assets, is planning to build a $350 million
office-and-condominium tower in Midland, Texas, as demand rises
in a region home to the world’s second-largest oil field.

The proposed 53-story Energy Tower at City Center has begun
pre-leasing its 560,177 square feet (52,042 square meter) of
office space, said William Meyer, a partner at Energy Related
Properties, which is working with Wexford on the project. The
tower would be more than twice the height of the city’s tallest
building.

Midland is located in the Spraberry-Wolfcamp range, which
has 50 billion barrels of recoverable oil, second in the world
to a Saudi Arabian field, oil-exploration firm Pioneer Natural
Resources Co. (PXD) said in an investor presentation yesterday. No new
high-rises have been built in the west Texas city of 120,000
since the mid-1980s, before collapsing oil prices sent the
city’s economic fortunes plunging, according to Mayor Wes Perry.

“It’s perfectly logical that this gets built,” Joseph Jacobs, co-founder of Greenwich, Connecticut-based Wexford, said
in an interview in Midland. “A new building like this in New
York would receive little notice, but we think New York needs
this type of building a lot less than Midland.”

Wexford should be able to find tenants for the building’s
office space because of a supply shortage and rising demand from
large oil companies returning to the Permian Basin after
reducing operations in the 1980s and ’90s, Perry said. The west
Texas basin has yielded more than 30 billion barrels over the
past century, more than any other U.S. region, according to
Midland College’s Petroleum Professional Development Center.

“We’ve never had someone willing to pull out the checkbook
and do something like this,” Perry said.

Tower Financing

While Wexford hasn’t completed financing for the tower and
office rents aren’t yet set, “money isn’t an issue,” Jacobs
said. Plans for the tower include about 100 condominiums, a 198-
room hotel, 53,500 square feet of retail space and a movie
theater. The tower’s architect is Michael Edmonds, principal of
Edmonds International Ltd. in New York. Energy Related
Properties, Wexford’s partner on the project, is a Midland-based
investment firm led by developers Meyer and Scooter Brown.

Wexford partners including Jacobs and Charles Davidson hold
more than 25 percent of the capital in Wexford, which focuses on
energy and real estate investments, Jacobs said. The fund owns a
44 percent stake in Diamondback Energy Inc. (FANG), a Midland-based
exploration company.

While Wexford has owned real estate since its 1994
founding, the Midland building would be the largest development
it’s built, Jacobs said.